Top Small cap Funds that outperformed in bull and bear phases

Top Small cap Funds that outperformed in bull and bear phasesTop Small cap Funds that outperformed in bull and bear phases


Investors would always like to invest in mutual funds that give higher returns. However, it is almost impossible for anyone to identify a mutual fund scheme that give higher returns in that segment. However, it is very much possible to identify a mutual fund scheme that is consistently performing well compared to its benchmark. How about identifying a mutual fund scheme that outperformed in bull phase? How about identifying a mutual fund scheme that outperformed in bear phase? How about identifying a mutual fund scheme that outperformed in both bull and bear phases? We did some analysis and identified a few small cap mutual fund schemes that outperformed in both bull as well as bear phases.

Also Read: Best IT Mutual Funds to invest for 2019

What are small cap mutual fund schemes?


If you are already aware, skip his section.

Small cap funds are those which invests in companies which are small in size on market capitalization. These Funds invest in equity shares of companies in India, which have smaller capitalization and listed under the 250th rank of the underlying benchmark. These stocks are typically that has high growth potential, however, carries a high risk too.

How we identified small cap funds that outperformed in both bull and bear phases?


In our analysis, we are considering 20% positive returns or 20% negative returns in SENSEX as bull run and bear phase respectively. Here are some of the parameters considered in filtering the best small cap fund that outperformed in bull and bear markets.

1) We have observed that we had a bull market during Jan-2012 to Dec-2014 and SENSEX jumped over 90% in that 3 year period. Smallcap Funds that gave the highest returns during that period are considered in our list. We can call this as bull run-1.

2) We have observed that we had another bull market during Jan-2016 to Sep-2018 (not major crashes) and SENSEX jumped over 50% in this period. Smallcap Funds that gave the highest returns during that period are considered in our list. We can call this as bull run-2.

3) We have observed that we had a bear market during Jan-2011 to Dec-2011 and SENSEX lost over 27% in that 12-13 month period. Any small cap fund that had performed well and gave positive returns during that period are considered here. We can call this as bear phase-1.

4) We have observed that we had a bear market during Jan-2015 to Dec-2015 and SENSEX lost over 20% in that 12-13 month period. Any small cap fund that had performed well and gave positive returns during that period are considered here. We can call this as bear phase-2.

5) Mutual fund schemes that have AUM of less than Rs 800 Crores are eliminated.

6) Funds falling under 1-Star and 2-Star as per Value Research are ignored.

Top Small cap Funds that outperformed in bull and bear phases


Here are the top small cap funds list.

Top#1 – Reliance Small Cap Fund


Overview: This scheme aims to generate capital appreciation by investing in smaller companies.

Performance:

a) This fund gave 125% point to point returns in Bullrun-1 compared to SENSEX returns of 90% indicating outstanding performance.

b) This fund gave 26% point to point returns in Bullrun-2 which is highest among the small cap funds. During that period SENSEX has given 50% returns.

c) This fund gave 25% point to point returns in bear phase-1 compared to SENSEX returns of negative 27% indicating outstanding performance.

d) This fund gave 4% point to point returns in bear phase-1 compared to SENSEX returns of negative 20% indicating outstanding performance.

e) This fund gave 32% annualized returns in the last 5 years, 14% annualized returns in the last 3 years and negative 6% returns in the last 1 year.

Top#2 – SBI Small Cap Fund


Overview: The mutual fund scheme aims long-term capital appreciation by investing in a diversified portfolio of small cap stocks.

Performance:

a) This fund gave 105% point to point returns in Bullrun-1 compared to SENSEX returns of 90% indicating outstanding performance.

b) This fund gave 22% point to point returns in Bullrun-2 which is highest among the small cap funds. During that period SENSEX has given 50% returns (though not comparable).

c) This fund gave 24% point to point returns in bear phase-1 comparing to SENSEX returns of negative 27% indicating outstanding performance.

d) This fund gave 12% point to point returns in bear phase-1 compared to SENSEX returns of negative 20% indicating outstanding performance.

Performance in the last 5 years: This fund gave 30% annualized returns in the last 5 years, 15% annualized returns in the last 3 years and negative 5% returns in the last 1 year.

Top#3 – Kotak Small Cap Fund


Overview: The mutual fund scheme aims long-term capital appreciation by investing in a diversified portfolio of small stocks.

Performance:

a) This fund gave 46% point to point returns in Bullrun-1 which is highest among the small cap funds. SENSEX returns were 90%.

b) This fund gave 17% point to point returns in Bullrun-2 which is the 3rd highest among the small cap funds. During that period SENSEX has given 50% returns.

c) This fund gave 11% point to point returns in bear phase-1 compared to SENSEX returns of negative 27% indicating outstanding performance.

d) This fund gave 14% point to point returns in bear phase-1 compared to SENSEX returns of negative 20% indicating outstanding performance.

e) This fund gave 22% annualized returns in the last 5 years, 8% annualized returns in the last 3 years and negative 11% returns in the last 1 year.

Should you invest in these small cap funds that outperformed during bull run or bear phase?

The straight answer is NO. These funds can be taken as starting point when you are planning to invest in some of the best small cap mutual funds for the long term. You can assess how these have performed over a 5-10 years time frame. You need to assess the risks involved in investing in such small cap funds. Once you have identified some of the best funds suitable for you, then you can proceed to invest some of your portfolio in such small cap funds.

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Suresh

Top Small cap Funds that outperformed in bull and bear phases

The Author

Suresh KP

Suresh KP i.e. me have written 1,800+ articles on this blog. I love doing analysis on various Best Investment Plans like mutual funds, Stocks, IPO's, NCD Bonds, Insurance products. If you like our blog, you can share some of the good articles on your Facebook or Twitter. This would be the BIGGEST gift which you would be giving to us.

10 Comments

Add a Comment
  1. Dear Suresh
    Can you write a article about msme loan scheme(how to apply, eligibility criteria, adv & disv)

    1. Sure. If you can post them under suggest a topic, it would be on my radar and i can post next week

  2. Hi Suresh, Thanks a lot for selecting such a topic. Excellent article and all points are indeed very well covered. In my opinion investing in small cap funds can be immensely rewarding if you have a long-term horizon.

  3. sir, what is the view of DSP Small cap fund for long term perspective?

    1. You can invest in existing small cap funds which have proven its track record instead of investing in new funds

  4. posted

  5. Why you missed to mention HDFC small cap fund and L&T emerging business fund.

    1. These are performing well now, however were under performers during bear phase

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